The Cost of Attrition, Part 2 – Calculating Your Attrition Rate

In the first of our series on Attrition, we saw that it’s a major challenge for contact centers, directly impacting operational efficiency, employee morale, and customer satisfaction. But attrition’s true cost often goes beyond the obvious expense of replacing employees. While recruiting and training new agents are significant costs, the deeper impacts of attrition can ripple across operations, customer experience, and overall business performance.

1. Burnout and Increased Workload

When employees leave, the remaining staff must absorb their responsibilities. This often results in burnout, leading to a vicious cycle of further attrition. According to Gallup, employees who experience high levels of burnout are 2.6 times more likely to seek other job opportunities.

 

2. Understaffing and Service Quality Decline

Understaffed contact centers struggle to meet service level agreements (SLAs), resulting in longer wait times and lower first-call resolution rates. Customers who experience poor service are more likely to churn, directly impacting revenue.

• Statistic: Zendesk reports that 61% of consumers will switch to a competitor after a single negative service experience.
• Example: A contact center that handles 5,000 calls daily may miss critical SLAs during peak hours, leading to abandoned calls and dissatisfied customers.

3. Customer Dissatisfaction and Brand Damage

High turnover can lead to a less experienced agent workforce, reducing the quality of customer interactions. Dissatisfied customers often share their experiences online, damaging a company’s reputation.

• Statistic: American Express found that U.S. consumers are likely to tell 15 people about a poor service experience.
• Example: A customer dealing with an unresolved issue may endure multiple callbacks with different agents, leading to frustration and negative social media posts.

4. Loss of Sales and Revenue

Contact center agents often play a critical role in upselling, cross-selling, and retaining customers. A lack of experienced agents reduces these opportunities and lowers overall revenue.

• Statistic: Research from Harvard Business Review shows that increasing customer retention rates by 5% can boost profits by 25% to 95%.
• Example: A contact center handling subscription renewals may lose valuable upselling opportunities due to inexperienced agents unable to confidently offer additional services.

5. Recruiting and Training Expenses

Replacing an agent is expensive. The cost includes recruitment, onboarding, and training, as well as the lost productivity while the new hire ramps up.

• Statistic: The Society for Human Resource Management (SHRM) estimates that the average cost to replace an employee is approximately 6 to 9 months of their salary.
• Example: If an agent earning $40,000 annually leaves, the replacement cost could range from $20,000 to $30,000.

6. Loss of Expertise

Experienced agents develop invaluable knowledge about systems, processes, and customer needs. When they leave, this knowledge often departs with them, reducing operational efficiency and increasing error rates.

• Statistic: SHRM estimates that 42% of the knowledge required to do a given job is known only to the person currently doing that job
• Example: A long-term agent who handled complex account management cases leaves without proper knowledge transfer, leading to delayed resolutions and frustrated clients.

 

Implicit costs of attrition shouldn’t be ignored!

The hidden costs of attrition in the contact center extend far beyond recruitment expenses. From burnout and service quality degradation to customer dissatisfaction and revenue loss, the consequences are far-reaching. By focusing on retention strategies—such as providing flexible schedules, offering career development opportunities, and fostering a positive work culture—organizations can mitigate these costs and build a more resilient workforce.

 

Calculating Attrition Rates

In the first of our series on Attrition, we saw how it’s a major challenge for contact centers, directly impacting operational efficiency, employee morale, and customer satisfaction. But as they say, you can’t manage what you don’t measure—so accurately measuring attrition is the first step in developing effective strategies to reduce it. Let’s talk about how to calculate attrition, look at a simple mathematical example, and explain the importance of measuring both monthly and annual attrition.

 

Let’s Get Those Calculators Out

Step 1: Determine the Number of Employees Who Left

This includes all voluntary and involuntary departures during the period you are measuring.

Step 2: Calculate the Average Number of Employees

To find the average, add the starting number of employees and the ending number of employees, then divide by two.

Step 3: Divide the Number Who Left by the Average Number of Employees

 

Example Calculation Monthly:

Let’s say a contact center starts the month with 500 employees and ends with 480. During the month, 20 employees left.

• Employees Who Left: 20
• Average Number of Employees: (500 + 480) / 2 = 490

• Attrition Rate: 20 / 490 = .0408 x 100 = 4.08%

 

Example Calculation Monthly:

If the center had 500 employees at the start of the year, and 450 at the end, so 150 employees left during the year.

• Employees Who Left: 150
• Average Number of Employees: (500 + 450) / 2 = 475
• Attrition Rate: 150 / 475 = .3158 x 100 = 31.58%

This 31.58% annual attrition rate indicates a more significant workforce loss over time.

 

Why Measure Both Monthly and Annual Attrition?

1. Identify Short-Term Trends: Monthly calculations can reveal sudden increases in turnover, helping companies address immediate issues like management changes or workload spikes.
2. Monitor Long-Term Patterns: Annual calculations provide a broader view of employee retention and allow for more accurate workforce planning and budgeting.
3. Compare Against Industry Benchmarks: You can benchmark both short-term and long-term attrition rates against industry standards to gauge your competitiveness in employee retention.
4. Evaluate the Effectiveness of Initiatives: Organizations implementing retention programs can track monthly and annual attrition to measure success over time.

By calculating both monthly and annual attrition, you can gain insights into workforce stability. Armed with data, you can make data-driven decisions to reduce turnover.

 

 

Unlike the weather, you can do something about attrition!

Corvoca has cutting-edge analytics solutions that can tame attrition and increase the average tenure of your agents. Find out more here, or contact us and let’s talk about ways we can manage your attrition challenges!

PS – this was written by a real human brain.